A Coming Data-Wakening Among Consumers Could Pose A Challenge For Retailers

The future of retail is full of bright, shiny artifacts: artificial intelligence, augmented and virtual reality, biometrics, the internet of things, 5G, voice commerce — the list goes on. At their best, these technologies have the capacity to make shoppers’ lives infinitely better, enhancing the best parts of shopping and removing the annoying bits like lining up at the checkout.

There is a potential dark side, however, to where retail is headed. Data is the oil that greases the wheels of commerce and the technologies that are here now and are yet to come. Retailers need access to consumers’ personal data in order to optimize their offers, anticipate needs, customize products and services, connect channels … and ultimately increase traffic and transactions. In the past, that hasn’t been a major issue. Consumers have been OK (or blissfully unaware) that they have traded their personal information for a better shopping experience. Data breaches in the past have been big news momentarily and then lost in the media cycle.

The Facebook news this week is different. When tens of millions of people have their personal siphoned off without their approval, that is a deep shock to the system. As CEO Mark Zuckerberg said in a Facebook post, this is a “breach of trust between Facebook and the people who share their data with us and expect us to protect it.”

Trust is the fundamental currency of brand value. Break that trust between brand and consumer, and the effects are instant and horrific. Witness Facebook’s stock dropping 7% on Monday, and Zuckerberg’s personal wealth declining $5.1 billion. A loss of trust is like a friend or partner cheating on you – it’s hard to get past. The instant rise of #deletefacebook as a trending hashtag in the past few days is evidence of how scorned people feel.

We’ve seen data breaches in retail before. In 2013, a cyber-attack on Target resulted in more than 41 million of the retailer’s customer payment card accounts having their credentials stolen. It cost Target more than $18.5 million to settle.

Imagine, however, a breach on a different scale entirely. Imagine if a large online retailer that builds its business on data were to suffer a large-scale hack. Suddenly the trust, and even love, that consumers feel for that brand would vanish, and the ramifications for retail more broadly would be widespread and significant.

The Facebook data breach will result in a new “data-wakening” among consumers. Without a doubt, it will mean that consumers become much more aware and protective of their personal information. They will give away less, and be sensitive to devices like smart speakers that passively gather behavioral and shopping data. They will want to control the data they share to use in advertising for more relevant offers. The data-wakening will also cause shoppers to cease dealing with businesses if they can’t be 100% confident in the storage and usage of their confidential data. A PricewaterhouseCoopers survey reported on last year noted that 85% of all U.S. shoppers “won’t do business with a company if they have doubts as to whether their data will be kept safe.”

In a recent research study among marketing thought-leaders that I have conducted, data hacks and loss of personal information were seen as the two biggest likely concerns for shoppers over the next four years. Retailers need to make cybersecurity and privacy critical elements of their forward planning. Otherwise, the shiny new technologies in the near future of retail will be undermined by the dark side of data.